Archive for the ‘cars’ Category

President Barack Obama‘s senior adviser said Sunday that any plan to shore up the auto industry will need to require sacrifice by all involved, from auto workers and industry executives to shareholders and creditors.

By DOUGLASS K. DANIEL, Associated Press Writer

General Motors Corp. and Chrysler LLC are expected to submit plans to the government by a Tuesday deadline to show how they can repay billions in loans and become viable in spite of a drop in auto sales not seen for a generation.

“We need an auto industry in this country. There are millions of lives, livelihoods that depend on it,” White House adviser David Axelrod said on “Meet the Press” on NBC. “We have a real interest in seeing the auto industry survive, but it’s going to require a major restructuring of the auto industry.”

Asked if the U.S. economy could withstand a bankruptcy at GM, Axelrod didn’t respond directly. Executives at the two automakers have said bankruptcy would not benefit their companies because consumers would be reluctant to buy cars from an automaker that might go out of business.

“How that restructuring comes is something that has to be determined,” he said. “But it’s going to be something that’s going to require sacrifice not just from the auto workers but also from creditors, from shareholders and the executives who run the company. And everyone’s going to have to get together here to build companies that can compete in the future.”

Axelrod wouldn’t say whether the administration would offer the auto industry more bailout money. GM already has borrowed $9.4 billion to stay in business, and it would receive an addition $4 billion if the Treasury Department approves its viability plan. Chrysler wants $3 billion more on top of the $4 billion it has already borrowed.

“We need to see what it is that they come up with this week,” he said.

Sending a kid to college, purchasing a new car, buying a first home or making the one you own more energy efficient. Those are a few of the ways Americans might cut their tax bills under the economic stimulus package Congress is crafting.

By STEPHEN OHLEMACHER, Associated Press

The biggest tax breaks target the working poor, especially those with children, but many apply to middle-income and even wealthy taxpayers.

Most workers would see about a $20 a week increase in their take-home pay, starting around June, from a new tax credit. Millions of additional low-income workers who don’t make enough money to pay income taxes would get checks from the government when they file their 2009 tax returns.

The $819 billion economic recovery package approved by the House last week includes about $188 billion in tax breaks for families and individuals over the next two years. The Senate package, which has topped $900 billion, has about $263 billion in tax breaks for families and individuals.

The goal is to get people to spend money at a time when most are cutting back and saving more. It makes sense to be frugal when the economy is in such bad shape, but it hurts the economy when everyone does it.

It’s the first time the group has taken such a position. The council’s head, Janet Froetscher, says using a cell phone behind the wheel makes the risk of having a crash four times greater than for those who don’t call and drive.

She says people have gotten used to the idea of taking the car keys away from those who have been drinking and it’s now “time to take the cell phone away.”

No state currently bans all cell phone use while driving. However, six states and the District of Columbia forbid the use of hand-held cell phones behind the wheel.

China plans to offer incentives for car owners to scrap their old models in favour of new ones, in a bid to lift the auto industry as it enters a period of crisis, according to state media.

The measure is part of a new package being prepared in Beijing aimed at avoiding a US-style collapse of the local auto sector, the Xinhua news agency reported.

AFP

“Details of the plan will be announced very soon,” said an unnamed official with the commerce ministry. He did not give any details.

The official was speaking shortly after dismal figures were released showing that Chinese auto sales fell 14.6 percent in November from a year earlier.

Other measures that China may adopt to bolster auto sales include cuts in the 10-percent vehicle purchase tax and easier access to car loans, according to Xinhua.

The health of the auto industry is crucial for the overall well-being of the Chinese economy as economists have argued more than 150 industries depend on it, including the steel and petrochemical sectors.

“The auto industry’s current difficulties are what concern me the most,” Premier Wen Jiabao was quoted as saying in a recent trip to the southwestern city of Chongqing, a car manufacturing key area of China.

OPEC oil ministers say they will likely approve a cut of 2 million barrels a day from their output as of early next year. And major non-OPEC producers will likely take hundreds of thousands more barrels off the market.

Saudi Arabia and other major OPEC producers are saying ahead of their meeting Wednesday that a cut of that magnitude is in the offing, as early as January.

Additionally, Russian media are quoting Deputy Premier Igor Sechin as saying Moscow is ready to take 300,000 barrels off the market. And the oil minister of Azerbaijan tells The Associated Press that his country is willing to cut back by the same amount.

A 2-million barrel cut would be the largest single reduction ever by OPEC.

–Associated Press

The Molikpaq offshore oil platform off Sakhalin island in far eastern Russia. OPEC is set to announce a significant cut in oil output as the cartel seeks to support plummeting crude prices and producers’ incomes, while non-OPEC oil exporter Russia may also slice production.(AFP/File/Ursula Hyzy)

The Bush administration is trying to determine whether to push U.S. automakers to file for bankruptcy, or send them government funding that could be worth more than the $14 billion package that was rejected by the Senate.

A brand new Chevrolet is displayed at Santa Rosa Chevrolet December 12, 2008 in Santa Rosa, California. The White House said Monday it was studying options for a bailout of the US auto industry without indicating when an announcement would be made.(AFP/Getty Images/File/Justin Sullivan)
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In weighing a much larger rescue effort for U.S. auto makers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek — including whether to push the companies to file for bankruptcy — and how to raise necessary funds.

The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more.

One possible source of funding is the Treasury Department’s $700 billion fund set up to rescue the financial industry. Only about $15 billion remains uncommitted from the first tranche of $350 billion, so the Bush administration could be forced to request the second half to cover the car companies’ needs, people familiar with the situation said.

That likely would compel the administration to outline its plans for a range of other needs, including foreclosure prevention for struggling homeowners and possibly aid for state and local governments. That could spark another confrontation with lawmakers, who are increasingly divided over industry bailouts. Senate Republicans blocked a proposed bailout for the auto makers last week.

With Detroit’s car makers facing bleak short-term prospects due to a collapse in consumer demand for vehicles, the Bush administration was rushing to determine the extent of the companies’ financial problems. Late last week, some officials thought the government might be able to provide as little as $8 billion to tide the companies over until early next year. On Sunday, a person familiar with the situation said the companies’ collective needs could range from $10 billion to more than $30 billion. The administration spent the weekend poring over the auto makers’ books to assess their financial needs.

The Bush administration must also figure out whether, and how, to try to wring concessions from affected parties, including factory workers, dealers and holders of the companies’ debt. Without such concessions, the companies are likely to need cash infusions long into the future, congressional critics say.

The World Trade Organization has rejected an appeal by China against a ruling that favored the United States in a dispute over car parts, the European Union and Canada.

The WTO appeals panel recommended in a ruling released Monday that China be asked to bring its import tariffs for foreign auto parts into compliance with international trade rules.

Associated Press

Volkswagen cars are seen at a dealership in Shanghai December 14, 2008. REUTERS/Aly Song (CHINA)

U.S. and European trade officials welcomed the decision.

“Especially in light of the current problems faced by the U.S. auto industry, I expect China to comply promptly with its WTO obligations by removing an unlawful and unfair trade barrier that is harming U.S. workers and manufacturers,” said U.S. Trade Representative Susan Schwab.

Her European counterpart, EU Trade Commissioner Catherine Ashton, said, “China should now put an end to the discrimination and ensure a level playing field in its automotive sector.”

Officials at China’s mission to the WTO could not immediately be reached for comment.

Beijing had appealed the original ruling made in July, arguing that the taxes were needed to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars. It was the first time China lost a case before the world trade body.

Under the import rules, cars made in China must contain at least 40 percent Chinese-made parts or they are taxed at the rate of imported finished cars.

The U.S., the 27-nation EU and Canada argued that the tariffs made it cheaper for car parts companies to shift production to China, costing Americans, Canadians and Europeans their jobs.

China now has a “reasonable period of time” to make legislative changes, after which a separate WTO panel has to determine whether Beijing has come into compliance or is still breaking the rules, in which case sanctions can be imposed.

Festering animosity between the United Auto Workers and Southern senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.

By Tom Krisher and Kimberly S. Johnson
The Associated Press

UASW president Ron Gettelfinger (R) holds a press conference at union headquarters to discuss the failure of the bailout plan in Congress in Detroit, Michigan. The White House said Friday that it may tap a 700-billion-dollar rescue package to save US automakers from immediate collapse, a policy reversal hailed by Democrats and a major labor union.(AFP/Getty Images/Bill Pugliano)

The vitriol had been near the surface for weeks as senators from states that house the transplant automakers’ factories criticized the Detroit Three for management miscues and bloated UAW labor costs that lawmakers said make them uncompetitive.

But the UAW stopped biting its tongue after Republicans sank a House-passed bill Thursday night that would have loaned $14 billion to cash-poor General Motors Corp. and Chrysler LLC to keep them out of bankruptcy protection. The Bush administration later stepped in and said it was ready to make money available to the automakers, likely from the $700 billion Wall Street bailout program.

Still, autoworkers remain angry with the senators who tried to negotiate wage and benefit concessions from the union, then scuttled the House-passed bill that would have granted the loans and set up a “car czar” to oversee the nearly insolvent companies and get concessions from the union and creditors. Their top targets were Senate Minority Leader Mitch McConnell, R-Ky.; Sen. Bob Corker, R-Tenn., who led negotiations on a compromise; and Sen. Richard Shelby, R-Ala., who has been a vocal critic of the loans.

Pontiac G6 and Chevrolet Malibu’s are shown at the General Motors Orion Assembly plant in Orion Township, Mich., Friday, Dec. 12, 2008. Festering animosity between the United Auto Workers and southern Senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.(AP Photo/Paul Sancya)

While the high-stakes gambit places them squarely within the mainstream of anti-bailout public sentiment, at the same time it exposes the party to potentially devastating criticism that its failure to compromise doomed the Big Three automakers and deepened the economic recession.

Republicans argue that their rejection Thursday evening of a $14 billion loan package came in response to the concerns of angry taxpayers who are unwilling to pay for an auto industry bailout on the heels of October’s $700-billion financial bailout package.

By Manu Raju, Politico

Above: Lawmakers in a car wreck. Photo by Associated Press

“I think it would appear that the people who voted against this are carrying out the will of the voters as expressed through the phone calls to our offices,” said Sen. Charles Grassley (R-Iowa).

But that sentiment betrays the deep rifts the issue has revealed within the party, pitting Rust Belt and auto-state senators who joined Democrats in a plea for federal aid against their Southern colleagues who represent states where foreign-owned automakers constitute a significant economic presence. All of this takes place against the backdrop of an intraparty debate over whether the GOP has lost its core value of limited government.

Shares in London plummeted by nearly 180 points today, following the failure of US carmakers to secure a $14 billion rescue fund from the Government, raising the prospect that Chrysler and General Motors could file for bankruptcy within days.

The FTSE 100 index of leading shares tumbled 179 points to 4,209.49 as details of the US Senate’s refusal to back the bailout deal emerged. London shares followed Asia markets lower, with Japan’s Nikkei 225 Index, briefly falling over 7 per cent on massive selling of Toyota, Honda, Nissan and the other domestic automakers.

The Hang Seng plummeted nearly 7 per cent while the China Enterprises Index of mainland stocks dived 8 per cent. Asia investors are fearful that the market will become flooded with cheap US cars if America’s “Big Three” go bust after the Senate effectively threw out a $14 billion emergency bailout bill.

Pain was felt across Europe where stocks tanked, with Germany’s Dax down 3.9 per cent dragged lower by local carmakers, BMW, Daimler and Porsche. While in France, the CAC index fell 4.3 per cent on Renault and Peugeot’s tumbling shares.